Jenny Johnson, president and CEO of Franklin Resources, told analysts on a Jan. 31 earnings call for the quarter ended Dec. 31 that the firm’s Western Asset Management Co. fixed-income affiliate saw an estimated $17 billion in net outflows for January.
The latest outflows bring the total since August — when news emerged that WAMCO's then co-CIO, Ken Leech, was being investigated by the Securities and Exchange Commission — to roughly $120 billion, including $38 billion in December and $68 billion for the quarter ended Dec. 31.
Leech was put on leave at WAMCO in August. In late November, the SEC and the Southern District of New York filed fraud charges against him. A spokesman for Leech has said the veteran bond investor denies the charges.
Even after those outflows, WAMCO is managing roughly $260 billion in client assets, Franklin executives said.
Meanwhile, Johnson said, long-standing plans to have the broader Franklin Resources business assume noninvestment functions for WAMCO after a five-year period of relative independence following Franklin’s 2020 acquisition of WAMCO parent Legg Mason expired this July have been accelerated. That, in turn, should bring greater resources to the table for investments in areas such as artificial intelligence.
If WAMCO remains a work in progress, Franklin executives noted that other parts of its multiaffiliate business — such as Putnam Investments, the Boston-based manager Franklin acquired last year — are enjoying strong growth.
Johnson said in a news release that Franklin’s equity, multiasset and alternatives businesses saw net inflows of $17 billion for the latest quarter, and absent the WAMCO outflows the group would have reported long-term net inflows of $18 billion.
